The illusion of choice

"Everything begins with choice," said Morpheus. The Merovingian looked at him, with his steely eyes and says, "Choice is an illusion created between those with power and those without."

That's a dialogue from The Matrix Reloaded, a seminal film which institutionalized the kind of computer graphics that you see in movies today. This dialogue defines what is wrong with free market capitalism. It's the illusion of choice. The smokescreen of corporate induced propaganda that promotes crony capitalism. This crony capitalism only worries about profit and not the essential element of free markets- choice. It's letting the consumer choose from the available ideas in a market place of ideas. This could be an ideology, a product, service or a political line.

The basic idea of a free market would be, no one idea or person can dominate another. They should get equal space and equal opportunity to make their case. There should be a proliferation of ideas from across the political and economic spectrum. That would mean that I as an individual would have the liberty to choose what I would do with the limited resources that I have at my disposal. The resources could be anything, like my time and my energy. But to make it simpler, let's call it money.

If money is the means of transaction, then I should be able to buy what I want with an unbiased mind and exchange that money for something that I would value. This maybe food, clothing or luxury items like a iPhone 6S or the MacBook Pro. If I am allowed to make this choice taking in only what I need from the discourse, the value of the money that I have in my hand and the incremental value that exchanging the money, say ₹ 50,000, then it would be an unbiased choice.

But what happens when this choice isn't unbiased. What if everything doesn't begin with choice as Morpheus claims it to be. Then you have an illusion of a make believe world where one's choice is only as unbiased as our ignorance. 

Take the Nairobi WTO ministerial meetings for example. India was trying to protect its farmers from excessive agricultural imports from countries which subsidize their farmers' produce and allowing India to procure food grains from farmers to feed its hungry population.

The claim of the WTO (read western developed nations) is that such a system would fly in the face of free trade and would distort world trade. The reasons given are that the food grains that India purchases from its farmers using the minimum support price and then sells them to the needy at lower prices, floods the market with cheap 'distortionist' food grains. This stock of food grains could be sold in the international market and would 'distort' trade. Well, my problem isn't with this whole line of argument.

Look at it this way. What does the subsidy do? It tells the farmer that if you produce crop A, then the government would reward him by buying the harvest from her at a pre-decided price. This is taking away the choice from the farmer to pursue his own economic well being. Well, then how do you feed a country full of hungry people? Shouldn't the government be doing something about it? That's a noble idea, but when you tie in fertilizer benefits along with the kind of crop that is grown, it doesn't allow the farmer grow the crop that he would ideally like. Mihir Sharma explains this concept in detail in his book Restart.

Countries will always pursue distortionist trade practices that would benefit their people. That's a given. But the problem arises when a sovereirgn government is forced into taking decisions based on corporate lobbies. That's distorting the element of choice that one should enjoy in a free market of ideas. This is an ideal situation that we can never achieve, but hey if democracy is a process and is never ending, then why not strive towards another ideal. 

As The Merovingian rightly said, choice is an illusion. This illusion is created by those who want to maximize profits and create perpetual monopolies. They don't want credible regulators who put the consumers' interest first. These corporate giants want to maximize their profits so that they can have good quarter ending call with analysts. They can't see beyond the red and black of the profit and loss account at the end of the quarter. They can't see beyond profit projections that give a hard on to market analysts in predicting the next big bull run. They aren't the ones one should look to for the unattainable goal of a free market of ideas.

Then who must give the people the ability to make an unbiased choice?

"That, detective, is the right question," said Dr. Lanning, to Detective Spooner, in the movie iRobot.

It's the people stupid. It's the people.

Mann ki baat: Mitron, I oversold the 'Acche Din'

Hello Mitron. I am writing this after coming to terms with the reality of the 'Acche Din' project that we had embarked upon. It has come to my attention that we may have gotten ahead of ourselves. The enormity of the task has dawned upon me. The newspapers claim that I don't have talent in my cabinet. This contention might be true. But I will strive to steer us towards the promised land of the 'Acche Din'.

Let me enumerate how bad things are. But before you go through them all do remember, I have performed in the past. And I shall strive to do so even in the face of extreme adversity. This is my promise.

1) Our economy is in bad shape- Duh! If you had to be told that then you are one stupid person. We had performed incredibly well over the past decade beginning from the last few years of Atalji's govt because of export led growth. We didn't create incremental jobs. In fact, as the good doctor (my predecessor) would agree it was jobless growth that took place. This makes my task even more difficult as I have to not just deliver growth, but also deliver jobs. Check out what Ruchir Sharma says about the type of growth emerging market economies have had over the last decade. http://www.ndtv.com/video/player/india-forecasts/india-forecasts-top-10-economic-trends-in-2015/351747?curl=1421123064 I know it's NDTV, but Ruchir makes sense. I am gonna lump it.

2) The world economy is in bad shape- We were riding the global boom a decade ago. And the whole world is in tatters right now. People aren't willing to spend money, but I promised you'll the world. Mitron, do have faith in this humble servant. I shall strive to deliver.

3) Banks are saddled with debt- That's a shocker. I called a meeting of all the bankers in the serene town of Pune. They were promised that we won't meddle in their business decision, 'unless they're against in public interest'. But, Mitron they live in hard times. They've funded so many projects which haven't seen light of the day, that they've lost the appetite for funding any new ventures. Yes, SBI did fund Gautam bhai's mining project. But, it was just a one off. And then there were so many questions on that deal. I really like Raghuram bhai. He's finally delivered the rate cut that was needed. Now I need to speak to Jaitelyji and find out how the rest of the investment cycle has to be pushed forward.

4) Wait for our first full budget - Bhaiyo behno, we must wait for the budget before you write off any hope for a revival. There are many goodies in store for all the hopefuls. We shall strive to deliver a 'India first' budget. But to I hear to kickstart the investment cycle, we might have to take up the Keynesian method of running up a deficit and spending money to signal intent.

5) Mininmum Govt Maximum governance - This is one of my core beliefs. But for that we must sell off a lot of our centrally owned companies. You have all seen the drama created by the Coal India Limited employees. They almost created a power crisis in the country. Someone said that I am following the Thatcher way of taming coal workers. But, I am just following my heart and the manifesto I presented before y'all. Watch this space for more on the slogan.

6) Lack of talent - As you may have heard, I am facing a shortage of talent in my cabinet ministers. I am trying to remedy the situation by changing things around, but I am going to deal with this very soon. Hope Mr. Panagariya gets cracking at his new job and gives us actionable policy views. That can help me deal with the lack of talent.

7) The motor mouths - This is not much of a problem but an embarrassment and a distraction. My whole extended parivar  thinks that we must go back into the past and chase the irredentist goal of being a homogenous country. I know this is something I have to deal with eventually, but I am busy setting things right in the governance structure. Amit bhai has already sent a notice to Maharajji. I hope you'll show some patience. This humble servant shall keep these morons under check very soon.